On Monday, German news magazine Der Spiegel quoted anonymous high-level sources within the German government stating they were prepared to accept Britain leaving the European Union (EU).

British Prime Minister David Cameron is seeking to renegotiate key terms of Britain’s membership in the EU, including limiting migration from EU states. The Conservative Party leader has pledged to have a referendum vote on Britain’s continued membership of the bloc in 2017. Der Spiegel reported that German Chancellor Angela Merkel warned Cameron at last week’s EU summit in Brussels that she would not accept restrictions on the free movement of EU citizens within the bloc.

“For the first time, according to an assessment by the Chancellery and the Foreign Ministry, Cameron is pushing his country toward a ‘point of no return’ when it comes to European Union membership—a point at which Germany would cease doing all it can to convince Britain to remain a member of the EU,” the news magazine wrote.

It continued, “Were Cameron to continue insisting on an upper limit for immigration from EU member states, Berlin sources said ‘that would be that’.” Radio Bavaria reported the comments of a “government insider” who said, “The time for talking is close to over. Mrs Merkel feels she has done all she can to placate the UK, but will not accept immigration curbs from EU member states under any circumstances. It has come to a Mexican stand-off and it is now a question of who blinks first.”

In the days leading up to the summit, tensions between Britain and the EU heightened, as Cameron insisted Britain would not make a back payment of €2.1 billion ($2.62 billion) demanded by the European Commission, with the prime minister stating the charge was “completely unacceptable”.

The bill was presented after a recalculation of Britain's payments to the EU based on the country’s GDP growth, which exceeded previous estimations. It subsequently emerged that Brussels had only informed lower-level officials in London, not Cameron, before demanding payment by December 1.

According to the BBC, the UK could be liable for interest payments worth £114,247 a day from December, and if the UK didn't pay anything for a full year, the daily interest rate on the outstanding sum would rise to £244,520 per day.

The British government played down any rift with Germany, with Chancellor George Osborne saying the Spiegel report was based on “speculation”. He added, “David Cameron and the Conservative Party always put Britain’s national interest first and we will do what is in the interest of this country and the interest of this country’s economy.”

In an interview with BBC’s Newsnight Monday, Osborne said, “I’m someone who wants Britain to stay in the European Union … but it has to be a reformed European Union.”

He continued, “Britain joined the European Union as an economic proposition”, but added that the EU is now “causing problems for us”. For the UK, “as the big country that is not in the euro, this relationship is not working properly”.

Cameron’s stance on Europe is in large measure being determined by the pressure exerted by the anti-European United Kingdom Independence Party (UKIP) and the right wing of his own party, which is indistinguishable from UKIP. He is appeasing these forces and their social base in the months leading up to the May 2015 general election.

Last month, UKIP, which represents an external faction of the Tory euro-sceptic wing, secured its first elected Member of Parliament when a Tory MP who defected to UKIP won a subsequent by-election. The Tories could lose another by-election to UKIP this month after another defection of one of its MPs.

UKIP leader Nigel Farage responded to the Spiegel article by tweeting, “Still think you can renegotiate, Mr Cameron?” He later said, “The only logical next step is to abandon the renegotiation and announce an immediate referendum.”

From the opposing standpoint, the Tories also face opposition from coalition partners, the Liberal Democrats, over passing legislation allowing a EU referendum. The Liberal Democrats have been allocated limited parliamentary time to debate housing benefits, ahead of a bill put forward by Tory euro-sceptic Bob Neill. Last week Neill stated, “The Lib Dems have killed off our chances of putting into law, this side of an election, an in/out EU referendum by 2017.”

While the anti-EU media in Britain have portrayed the Spiegel article as the final standoff between Britain and the EU, the sharp rift is indicative of the brinksmanship by all the leading powers in the EU. Spiegel’s article is confirmation that Germany’s position remains the same over “the free movement of people, goods, services and capital” within the EU, as it seeks to maintain its position as the continent’s leading economic power. According to the Sunday Times, Merkel has rejected the favoured plan of Downing Street, which was to impose “quotas on low-skilled EU migrants by limiting the national insurance numbers issued to them”.

Last month, Jean-Claude Juncker, the incoming president of the European Commission, whose appointment Cameron had strongly opposed, also rejected the British plan.

The Times reported that Cameron will put forward another immigration policy that will stretch EU rules “to their limits” in order to placate Germany. The plan envisages the banning of EU migrants from Britain unless they have a job. If migrants could not support themselves they would be deported.

The Independent cited an unnamed UK minister who said, “The focus is on drawing up a German-compliant package of measures. Cameron needs to square Merkel or we won’t get anything. We’ve got to stretch the existing rules to their limits. There is no right in the EU to stay somewhere if you can’t support yourself after three months. That will be part of the package, I have no doubt.”

This is essentially the situation already existing in Germany with respect to the more recent accession countries from Eastern Europe.

Cameron plans to make a speech on immigration in December with the Times reporting he will seek to “square” Merkel beforehand.

Even the staunchly anti-EU Daily Telegraph was keen to play down the Spiegel report, with one article headlined, “Angela Merkel hasn't issued an 'ultimatum' to David Cameron over EU migrants” and that “Germany certainly doesn't want the UK to leave the EU.”

Mats Persson noted, “Germany too has a pretty robust domestic debate about the rules around free movement. The country’s parliament will vote this week on a number of proposals aimed at tightening EU migrants’ access to benefits, including re-entry bans for those migrants that abuse of the German welfare system.”

London Mayor Boris Johnson, widely tipped to be Cameron’s successor as Tory leader, told the Telegraph Monday it was “absolutely unthinkable that Germany would want us to leave” the EU. Johnson described Spiegel’s intervention as “staking out of positions in advance of what will be a very tough but I think ultimately successful negotiation”.

He noted, “It’s the last thing they want. We are close allies in our vision for a free-trade Europe, for reducing bureaucracy, for reducing the wastefulness, all that kind of thing. They need us as a counterpoise to the French and the Mediterranean economies and their way of doing things.”